www.tejdhavalfinserve.com: NRI Corner

A. MUTUAL FUND

1. Can NRIs invest in mutual funds in India?

Certainly, NRIs can invest in mutual funds in India – as long as they adhere to the Foreign Exchange Management Act (FEMA). A mutual fund in your home country can give you a diversified portfolio with the desired mix of debt and equity securities. Even if you are risk-averse and want a fixed income investment avenue, the Indian debt market comes with higher interest rates. You may start with equity funds, debt funds or hybrid funds.

2. Benefits of mutual fund investments for NRIs

As one of the fastest growing economies in the world, Indian economy attracts thousands of investors from abroad. Given below are some of the benefits NRIs can enjoy by investing in Indian mutual funds.

Easy to manage fund online from anywhere

With the option of investing online, it is easier to track and manage your mutual fund from the residence country too. Investors can buy, redeem, switch as well as opt for systematic transfer or withdrawals online. No need to give cheques, make DDs, fill in physical forms or even be in the same country! You will receive regular account statements (CAS) via email. Asset Management Companies also post portfolio disclosures online to keep investors informed.

Scope for more profits from rupee appreciation

If the INR value has hiked on the resident country’s currency, it means more profits for the investor. For instance, if an NRI from the UK invests 1000 pounds in a mutual fund in India at an exchange rate of Rs. 100 to 1 pound. Even with possible depreciation, the investor can reap good returns. NRIs and PIOs can also get the same benefits by investing in India-based mutual funds in their own country of residence.

3. Procedure for NRIs to invest in India

Asset Management companies in India cannot accept investment in foreign currency. For this, the first step is to open an NRO account, NRE account or a Foreign Currency Non-Resident (FCNR) account with an Indian bank. You can invest by any of the below methods.

Self/Direct

One can carry out transactions, debiting or crediting through normal banking channels. Your application with the required KYC details must indicate that the investment is on a repatriable or non-repatriable basis. KYC documents include a recent photograph, certified copies of PAN card, passport, residence proof (outside India), and bank statement. The bank may require an in-person verification which you can comply by visiting the Indian Embassy in your resident country.

Via Power of Attorney

Another easier but common method is to have someone else invest on your behalf. Mutual fund companies allow power of attorney (PoA) holders to invest on your behalf and take other decisions pertaining to your investments. However, signatures of both the NRI investor and PoA should be present on the KYC documents to make the investment.

4. Mutual fund regulations for NRIs

KYC for NRIs

To complete the KYC process, submit a copy of your passport – relevant pages with name, date of birth, photo and address. The current residential proof too is must, whether temporary or permanent. Some fund houses may insist on In-Person Verification too.

FIRC (Remittance Certificate)

If you have made the payment via a cheque or a draft, you must attach a Foreign Inward Remittance Certificate (FIRC) with it. In case, that is not possible, a letter from the bank would also do. This confirms the source of funds.

Redemption

The AMC will credit the corpus (investment + gains) you get after fund redemption to your account after deducting taxes. They can also write a cheque for the same. Some banks allow to credit the redemption amount directly to the NRO/NRE account. If you have opted for non-repatriable investment, they can credit the proceeds only to an NRO account.

5. Tax implications for NRI Mutual Fund Investors

NRI investors often fear that they will have to pay double tax when they invest in India. Well, that is certainly not the case if India has signed the Double Taxation Avoidance Treaty (DTAA) with the respective country. For instance, India has signed this treaty with the US. Hence, you can claim tax relief in the US, if you have already paid taxes in India.

The gains from equity mutual funds are tax-free for an investment of over one year. Tax is deducted at source on the profits (capital gains) on the invested amount for holdings exceeding one year. Currently, it is 10.40% LTCG tax. For a shorter period the short term capital gain tax is 15.60%. In case of debt funds, they add the gains (made in less than 3 years) to the individual’s income. Holding the fund for more than three years will result in 20.08% tax on the gains with indexation benefit.

6. Points to remember when investing in India

Your investment carries the right of repatriation of the amount invested and amount earned, only until you remain an NRI.
Residential address in the resident country is a mandatory field. Hence, you must also attach an attested proof along with application.
The compliance requirement is the US and Canada are more stringent as compared to other nations. According to FATCA guidelines, all financial institutions must share the details of financial transactions involving a US person with the US Government.
Are you a resident of any of the 90 countries that have signed Common Reporting Standard? CRS is a global reporting system to combat tax evasion. In short, NRIs can choose to invest in his/her home country. The process may have some initial hassles. However, in the long run, the return on investment would be worth it. Currently, only eight fund houses accept mutual fund investment from NRIs residing in the US & Canada. So, there is certainly no reason for you to be left out of investing in one of the fastest growing economies.

B.LIFE INSURANCE CORPORATION OF INDIA

Welcome to NRI Centre. We have made an attempt here to furnish important features applicable to Non-Resident Indians (NRI) and People of Indian Origin having foreign nationality and residing in foreign countries (FNIOs).
NON-RESIDENT INDIAN / FOREIGN NATIONAL OF INDIAN ORIGIN/OCI:

1. NON-RESIDENT INDIAN

A non-resident Indian is a citizen of India temporarily residing in the country of his/her present residence and holding a valid passport issued by the Government of India.
NRI should not be a green card holder. He/She should not have applied for or planning to apply in the near future for acquiring citizenship of his /her present country of residence or any other country.
It is clarified that People of Indian Origin having foreign nationality and residing in foreign countries FNIOs/ Green card holders are not considered as NRIs for the purpose of allowing insurance.
Policies are issued in Indian Rupees only. Our Branches and Joint Venture Companies (refer to option; ‘Associates’ on main page for details) issue policies in their local currencies. E.g. Our U.K. Branch issues policies in Sterling Pound currency.
NRIs are allowed insurance on their visit to India where all formalities are completed during their stay in India. In such cases they would be treated at par with Indian Lives for the purpose of allowing insurance.
NRIs may also obtain insurance cover from their present country of residence where all formalities are completed in their present country of residence and this process is called ‘Mail Order Business’.
Minimum Sum Assured allowed would be Rs. 10 lakhs and maximum would depend on conditions of insurability. However, under mail order business, maximum sum assured would be limited to Rs. 3 Crore only.
Proof of income in the form of income tax returns, copy of employment contract where emoluments are mentioned, Certificate from Chartered Accountant, Personal Financial Questionnaire (PFQ) etc. would be required if the sum assured is high or if the proposal is submitted through Mail Order Business.
All types of plans are allowed subject to the conditions that.
Critical Illness Benefit is not granted.
Term Rider Benefit would be restricted to certain limit of Sum assured.
Sum Assured would be restricted in respect of term insurance plans.
NRIs may obtain insurance cover under our Non-Medical (Special) scheme subject to certain restrictions, some of which are listed below:
Applicable if insurance is obtained during visit to India or through Mail Order Business when LIC Agents visit the country of residence of NRI for completing the necessary formalities.
Maximum age at entry would be 50 years.
Plans with high risk cover and term rider benefits would not be allowed.
The proposer should be employed in Government or reputed commercial firm or should be a professional such as Chartered Accountant, Doctor, Teacher, Lawyer, Accountant, Engineer, etc.
This scheme is applicable to those NRIs who are residing in Group V countries only. (See Annexure-V for group details).
Rules regarding insurance under medical scheme through ‘Mail Order Business’ are given in Annexure-I.
The rules regarding granting insurance cover to NRIs during their visit to India would be similar to those applicable to Indian Lives. Help of a local agent/ development officer / branch office of LIC may be obtained. Addresses of our Offices can be obtained from the option: ‘locator’.
The main papers required to obtain insurance cover would be
Prescribed proposal form depending on the type of policy selected.
NRI Questionnaire. (Annexure-II)
Medical Report (not applicable if the proposal is under non-medical scheme)
Special questionnaire (if proposal is under ‘Mail Order Business’ and if the agent does not visit the country of residence of proposer)- Annexure-III
Special Medical Reports, if called for.
Attested copy of Passport.
Proof of age and income.
Initial Deposit equivalent to Installment Premium under the proposed plan of insurance.
A reference may please be made to Annexure-V for details such as Residence Extra and other restrictive conditions.

2. Overseas Citizen of India (OCI) / People of Indian Origin having Foreign Nationality and residing in Foreign Countries (FNIOs/ Green Card holders/ OCI)

Mail order business will not be allowed
Policy in Indian Currency would be issued, only during their stay in India.
Report by designated LIC agents is compulsory.
Claim would be paid in India in Indian Currency only.
Please refer to Annexure-V for details such as residence extra and other restrictive conditions and Plans allowed, Maximum sum assured etc.
Other rules are same as NRIs.

Other Points

Existing policies taken while in India will continue in Indian Currency even after the life assured moves to foreign countries as NRI. Please keep the concerned servicing branch of LIC informed about your new status i.e. NRI and your new address. Please submit to them NRI questionnaire form duly filled and signed. (See Annexure-II). You may continue to pay premiums through various approved channels to LIC.

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